JOHANNESBURG (miningweekly.com) – Alecto Minerals on Thursday said it was now targeting the commissioning of its Matala gold project, in Zambia, in 2017, as it was awaiting the completion of the last leg of the financing plan for the project.

To complete the financing, the company needed to reach an agreement with local Zambian institutions for the provision of an on-lending facility and additional security to facilitate the flow of funds from its vendor financing partner Yantai Xinhai Machinery.

At the end of May, Alecto received a conditional term sheet from Xiamen XGMA International Trade Company confirming that an agreement had been reached for the provision of risk cover and supplier's finance from State-owned China Export & Credit Insurance Corporation.

The supplier's financing terms included a requirement for security to be provided in favour of the financing Chinese Bank that, in turn, requires Ministerial approval in Zambia.

However, shortly after receipt of the term sheet, the Zambian Parliament was dissolved ahead of Presidential elections which were concluded on September 8, resulting in delays.

"We made very rapid progress with our Chinese funding partners at the beginning of this year and it is regretful that we have subsequently been unable to meet our original timeline for completion. However, the external factors outside of our control have required us to exercise patience as we seek to close the financing,” CEO Mark Jones said.

He added that the parties were “excited” about what would be a true Zambian gold mining success story. “We are fully committed to ensuring that it happens. Due to our size, satisfying potential financiers of the merits of taking on project risk has not been without its challenges, and progress has been slower than we would have wished,” Jones added.

Once the necessary guarantees have been agreed in principle with a financial institution in Zambia, the company will enter the documentation phase with all parties to finalise the financing.

Alecto has identified the potential to develop a low-cost, profitable, small-scale 400 000 t/y openpit mine at Matala and its satellite deposits.

An updated scoping study for Matala, completed by Alecto, indicates the potential to generate cash flows and strong economics at an assumed gold price of $1 150/oz.